The Singapore Chamber of Maritime Arbitration Responds to Industry Shifts in the 4th Edition of the SCMA Arbitration Rules

The Singapore Chamber of Maritime Arbitration (SCMA) published the 4th edition of the Arbitration Rules on 1 December 2021. These Rules came into effect on 1 January 2022 and are applicable to all cases filed on and after 1 January 2022. The Rules were a product of public consultation and the SCMA has explained that the aim behind the new Rules is to foster a user-friendly, cost effective, and efficient approach to dispute resolution.

This approach has held the SCMA in good stead. Over the years, the SCMA has seen steady and significant growth. The total claim amount from cases in 2014 was USD 73.9 million (SCMA Year In Review, 2018, p.2) and in 2021, the total claim amount rose to USD 163.5 million (SCMA Year In Review, 2021, p.6). The SCMA has also seen its membership expand. Currently, the SCMA boasts about 400 members and 127 paneled arbitrators (SCMA Year In Review, 2021, p.6). Much of this growth is due to the SCMA being responsive to changes in the maritime industry.

We turn now to explore some of the rules in the 4th edition of the SCMA Arbitration Rules 2022.

Accommodating to the Virtual World

With the global lockdown caused by the pandemic, the legal world had to pivot to conducting hearings remotely. The new Rules 17.3 and 25.3 respectively provide that case management conferences and hearings can be held virtually. This will naturally save parties time and costs in attending hearings in person, whilst still allowing the dispute resolution process to move forward.

Further, the new Rules allow for the service of documents to be done by electronic means. Rule 3.1(c) states that notice or communication can be made to a designated electronic mailing address. Rule 3.3 further defines a designated electronic mailing address to be one that the parties have agreed to in their correspondence or one that is used habitually and effectively between the parties in the course of their business. Also, under Rule 34.4, the members of the tribunal may sign the award electronically without needing to meet in person.

Arbitrator Appointment

The appointment of the arbitral tribunal has also been simplified under the new Rules. Rule 8.4(c) provides that two party-appointed arbitrators can constitute a tribunal and may appoint a third arbitrator at their discretion “so long as this is done before any substantive hearing or without delay if the two arbitrators cannot agree on any matter relating to the arbitration.” Rule 33.2 specifies that where there is no third arbitrator, the remaining members of the tribunal will have the power to make decisions and pass orders and awards. This rule effectively codifies the existing custom in the maritime industry with respect to the appointment of arbitrators.

Preventing Prejudicial Changes in Party Representation

Under the new Rule 4.4, once the tribunal has been constituted, if a party wishes to change its authorised representative, the same shall be done subject to the approval of the tribunal. The tribunal can reject such a request if it is satisfied that there is substantial risk that the change would prejudice the conduct of the proceedings or enforceability of the award.

This is a welcome development in overcoming the tactical warfare that parties sometimes deploy in order to gain an advantage in the arbitration by, for example, changing representation at key junctures in the arbitration to purposefully cause delay.

Optional Oral Hearings

In an effort to save time and costs of arbitration, documents only arbitration has also been introduced under the new Rules. Under Rule 25.1, the tribunal has the discretion to decide if there should be a hearing for the matter or if it must proceed on documents alone.

However, if a party requests an oral hearing, the tribunal is bound to schedule an oral hearing for the matter.

Expedited Procedure

Under the new Rule 4.4, any case where the aggregate amount of claims and counterclaims is equal to or less than USD 300,000, the arbitration, unless otherwise agreed by the parties, shall be conducted in accordance with the SCMA Expedited Procedure. Expedited arbitration is conducted by a sole arbitrator as a document only arbitration unless the tribunal requires an oral hearing. Under the expedited procedure, the service of case statements is to be made within 14 days and the award must be made 21 days from the receipt of the case statements or, if an oral hearing is fixed, from the close of the oral hearing. This Expedited Procedure replaces the Small Claims Procedure that had a threshold value of USD 150,000, and is a quick and cost-effective means of resolving lower value disputes.

Closure of Proceedings

Under the New Rule 27.1, “after the lapse of three months from the date of any final written submission or final hearing” proceedings are deemed closed. This provides greater certainty on the length of the arbitral process, especially since delays in the issuance of an award are a common frustration amongst users.

Conclusion

With the help of the new Rules, the SCMA Arbitration Rules embrace the technology-driven world and make remote hearings more viable and effective. The Rules introduce a cost-effective framework centred around efficiency. Through these changes, the Singapore Chamber of Maritime Arbitration is set for continued success.

This article was co-written by Managing Partner and Head of Dispute Resolution Bazul Ashhab and Shipping Partner Prakaash Silvam for Jus Mundi’s latest Maritime Arbitration Report titled “The Singapore Chamber of Maritime Arbitration Responds to Industry Shifts in the 4th Edition of the SCMA Arbitration Rules”.

Read the full report here.